Month: July 2005

Aid for Liberia

In the wake of the G8 summit in Gleneagles earlier this month, it seems appropriate to comment on the possible uses of aid to Liberia.  At the very least, it would be nice to be able to examine the use of past official aid to Liberia.  Unfortunately, any efforts in this direction are merely speculation. 

The World Bank’s Africa Quick Query indicates that very little official international aid made its way to Liberia over the last 5 years of the Taylor regime.  From 1999 to 2003, the aid figure ranges from $12 to $32 per capita.  After spending a week in Liberia in each of the past two summers, it seems obvious to me that any aid received by former "President" Charles Taylor was mis-appropriated to his own use of physically and militarily mitigating opposition.  For obvious reasons, this cannot be proved.  Clearly, the funds were not spent on infrastructure.  Electricity has yet to be restored (it has been out since Taylor took over in 1989), and all "roads" are painfully in disrepair.

Dcp_0239_2On the other hand, private aid to Liberia has been and remains a significant source of help to Liberian citizens.  If you are interested in contributing to Liberia, the organization that I have worked with is African Christians Fellowship International (ACFI).  ACFI is an indigenous religious organization that provides orphanages, medical clinics and tuition-free schools to the indigent and physically handicapped.  For example, the only deaf school/orphanage in the entire nation of Liberia is provided by ACFI, as deaf children are social outcasts in Liberia.   

James Surowiecki on foreign aid

…it’s a myth that aid is doomed to failure. Foreign aid funded the campaign to eradicate smallpox, and in the sixties it brought the Green Revolution in agriculture to countries like India and Pakistan, lifting living standards and life expectancies for hundreds of millions of people. As for the Asian nations that Africa is being told to emulate, they may have pulled themselves up by their bootstraps, but at least they were provided with boots. In the postwar years, South Korea and Taiwan had the good fortune to become, effectively, client states of the U.S. South Korea received huge infusions of aid, with which it rebuilt its economy after the Korean War. Between 1946 and 1978, in fact, South Korea received nearly as much U.S. aid as the whole of Africa. Meanwhile, the billions that Taiwan got allowed it to fund a vast land-reform program and to eradicate malaria. And the U.S. gave the Asian Tigers more than money; it provided technical assistance and some military defense, and it offered preferential access to American markets.

Coincidence? Perhaps. But the two Middle Eastern countries that have shown relatively steady and substantial economic growth–Israel and Turkey–have also received tens of billions of dollars in U.S. aid. The few sub-Saharan African countries that have enjoyed any economic success at all of late–including Botswana, Mozambique, and Uganda–have been major aid recipients, as has Costa Rica, which has the best economy in Central America. Ireland (which is often called the Celtic Tiger), has enjoyed sizable subsidies from the European Union. China was the World Bank’s largest borrower for much of the past decade.

Read more here.  The quality of this debate has improved markedly in the last ten years.  I’ll predict that most MR readers are skeptical about foreign aid, but I still regard this as an open question.  The key question is whether the above favorable conditions can be replicated by policy or foreign aid formula.

James Glassman changes his mind on Social Security

…the president’s rhetoric is unconvincing. Yes, he’s made the case that Social Security is headed for insolvency — tax receipts from workers and employers won’t cover benefits for retirees starting in 2018. But he has not managed to connect insolvency with his idea of personal accounts.

No wonder. These are two completely separate issues. Personal accounts won’t prevent Social Security’s impending bankruptcy. Personal accounts are great for other reasons: they will encourage savings, provide a more comfortable retirement, give people a nest egg they can own and increase personal responsibility. But the accounts won’t solve the insolvency problem.

Bush should stop talking about these two issues — insolvency and personal accounts — as though they are connected. He needs to concentrate on one or the other to start.


You probably think I’ll say "personal accounts." I might have, but a few months ago I took the administration’s position in a debate in Reason magazine with innovative economist Tyler Cowen of George Mason University. Sometimes, you learn something from such an encounter. I now see that Tyler was right [TC: thanks!], and what follows is adapted from his argument.

I believe the president should focus on putting Social Security on a sound footing. The best way to do that is to adjust benefits by increasing the retirement age, cutting back payments further for those who choose to retire early and indexing the growth in benefits to the consumer price index (that is, inflation) rather than to wages. Raising payroll taxes — or increasing the ceiling below which those taxes are collected — should be off the table. Such a hike would have a disastrous effect on the economy.

Should we give up on personal accounts?

Not at all. Those accounts will grow organically as Social Security withers.

The inevitable result of benefit adjustments will be to reduce, slowly over time, the importance of Social Security in the overall retirement scheme. The system would become more of a safety net. Retirees would, very naturally, fill in the gap by saving more.

The vehicle for those savings would be personal stock and bond accounts — which already exist!

Here is the TCS link.  Here is Robert Barro’s change of heart.

Dollars for Guns

When the UN entered Liberia in September 2003, they instituted a voluntary disarmament program.  The program specified that ex-combatants could turn in their guns for $300 and a free education (completion of high school or a choice between various trade schools).  The $300 alone is a significant figure, as it is more than double the per capita gross national income.  From outside Liberia, this program appeared to be successful.  Kofi Annan ended the voluntary disarmament in June 2005. 

With no official data to support their claims, many Liberians feel that the program was a disaster, and that all of the significant factions still have plenty of arms.  The problems they cite are not surprising to an economist:

  1. Many guns were imported to Liberia to cash in on the $300, a price well above market-clearing.
  2. UN military personnel, enjoying their immense power, actually declined guns in several parts of the country, in order that their assignment in Liberia might last longer.

Will the violence return after the elections in October?  Liberians seem to be split on this.  Given that there are currently 52 candidates for President, most citizens will be disappointed with the outcome.

John Roberts

A Googling of "Judge John Roberts economics" turns up little real, his paper trail is thin.  Here are the useful Scotus links.  The very smart Juan Non-Volokh likes him.  He is a member of The Federalist Society.  The Washington Post reports:

On the D.C. Circuit, Roberts voted with two colleagues to uphold the arrest and detention of a 12-year-old girl for eating french fries on a Metro train, though his opinion noted, "No one is very happy about the events that led to this litigation." In another case, Roberts wrote a dissenting opinion that suggested Congress might lack the constitutional power to regulate the treatment of a certain species of wildlife.

And nailed it one hour in advance, read more here.

Rx for OTC

I went to the doctor yesterday.  I told him that to avoid altitude sickness in Peru I wanted a prescription for Diamox.  He used to be surprised when I self-diagnosed but he knows me now.  He wrote the prescription and I was done in less than four minutes.  I like my doctor but this visit took an hour of my time and probably cost the insurance company at least $100, my deductible was $25.  No big deal for me but a non-trivial expense for someone without insurance.

Why aren’t more pharmaceuticals available over the counter?  In other words, why must we pay the priestly caste known as physicians for the right to treat ourselves?  "Safety," we are told (second only to "for the children" as an excuse for giving up liberty).  But, as Sam Peltzman pointed out long ago, safety runs both ways.  Not getting a pharmaceutical because it’s too expensive and time consuming to go through a doctor has adverse safety consequences and there is no evidence that the costs of potential mistreatment outweigh the costs of undertreatment.  (In anycase, politics not safety is often the reason for restrictions on OTC drugs e.g. the morning after pill.)

In fact, there are many countries where prescriptions are not required for legal medicines and they appear to do just fine.  Writing in Reason, Kerry Howley points out (online version, the print version is longer and I am quoted) that in this respect if no other Myanmar is a bastion of rationality and liberty compared to the United States.

Last year, while living in the Southeast Asian nation of Myanmar,
my phones were tapped, my journals were read, my work was censored, and
for the first time in my life, I was given the authority to care for my
own body.

There is no prescription drug system in Myanmar, but there are plenty of illnesses waiting to befall an effete Western immune system.  My expatriate colleagues and I were free to treat our ailments as we saw fit.
We staved off food poisoning and bouts of malaria with frequent trips to
the local pharmacy, consulting doctors when necessary, but ultimately
responsible for our own medical decisions. We formed doctor-patient
relationships that were partnerships rather than paternalistic
hierarchies, and each of us lived to tell the story.

Coming back to the States in the midst of hand-wringing about direct-to-consumer advertising, the restriction of life-saving cholesterol drugs, a wrenching process to make the morning-after-pill readily available, and now a push to put Sudafed behind the counter, it’s increasingly hard to understand why Americans cede crucial health decisions to the bureaucratic dithering of the FDA. In an age of empowerment through information, it is mind-boggling that patients are still willing to be silent spectators while their doctors call the shots.

Are cruise ships a libertarian paradise?

The cruise ship Voyager holds more than a half-million gallons of fuel, five tons of meat, forty thousand eggs, and more than two tons of flour.  Its eight thousand passengers form a floating mini-city.  The cruise ship operator provides a large number of public goods.  Its laws are private, and imposed by contract.  Do not expect democratic procedures.  To the extent they treat you well, it is due to reputational concerns.  Many of the doctors and nurses do not have proper governmental credentials.  The laborers come from around the world, and the manual labor typically comes from very poor countries, such as Honduras or the Philippines.  Customers choose across a large number of cruises, and typically seek out similar demographics.  The sector is close to tax-exempt and encounters only minimal regulation.

Those facts are from Kristoffer Garin’s Devils on the Deep Blue Sea: The Dreams, Schemes and Showdowns that Built America’s Cruise-Ship Empires, an interesting new book.  By the way, this book claims that fraud and food poisoning are rampant on cruise ships.

Here is an article about seasteads as a means of realizing libertarian ideals.  Randall Parker proposes cruise ships instead of nursing homes

Outside of a brief Galapagos jaunt, I’ve never been on a cruise — I would not be able to stand the socializing, bland food, and forced confinement — so I am in no position to judge.  But if I were a libertarian anarchist, this is what I would be studying. 

Why are we organizing our kids so much?

The data confirm what I have long suspected:

Childhood’s outdoor pastimes are declining fast and the rate has accelerated in the past decade, especially the past five years, according to the National Sporting Goods Association (NSGA) annual survey of physical activity.

Since 1995, the portion of children ages 7 to 11 who swim, fish or play touch football has declined by about a third. Canoeing and water skiing are down by similar amounts.

The relationship between kids and their bikes is especially telling. In 1995, 68% of children ages 7 to 11 rode a bike at least six times a year. Last year, only 47% did. The sales of children’s bikes fell from 12.4 million in 2000 to 9.8 million in 2004, a 21% decline, according to Bicycle Industry and Retailer News,an industry magazine…

Children today tend to get outdoor exercise by appointment.

Soccer participation has been unchanged in the past decade – about 28% of kids age 7 to 11 play the sport. Soccer leagues and soccer camps are in full bloom this summer, although non-organized soccer games are uncommon.

Organized outdoor activities have kept kids moving. They are declining but much more slowly that unstructured outdoor play.

Little League participation has fallen to 2.1 million children, down 14% from its peak in 1997. But overall baseball playing – pick-up games, catch, pickle – has declined nearly twice as fast, the NSGA surveys show.

Here is the full story.  Now how about some hypotheses? 

1. Escalation of a signaling game.  You have to get those kids ready for college now.

2. Reference frames are relative, and an initial slight increase in parental paranoia has fed upon itself and has been bumping up safety and control standards for many years.

3. Suburban sprawl is a tax on spontaneity.  And as more kids get trapped into planned networks, it becomes harder to go it alone.

4. Parents have always wanted to exercise such control; only now has the ongoing growth of civil society provided the requisite institutions.

Any other nominations?

Facts about storage

Consider the four square feet immediately around you. Now consider that are you occupying your average per capita share of the Great American Self Storage Empire. According to the Self Storage Association, a trade group charged with monitoring such things, the country now possesses some 1,875 billion square feet of personal storage. All this space is contained in nearly 40,000 facilities owned and operated by more than 2,000 entrepreneurs, including a handful of publicly traded giants like Public Storage, Storage USA, and Shurgard.

What this translates into, apart from one hell of a lot of stationary bikes kept behind padlocked metal doors, is an industry that now exceeds the revenues of Hollywood (and doesn’t have to deal with Tom Cruise). One in 11 American households, according to a recent survey, owns self-storage space–an increase of some 75 percent from 1995. Most operators of self-storage facilities report 90 percent occupancy, with average stints among its renters of 15 months. Last year alone saw a 24 percent spike in the number of self-storage units on the market.

The causes?  Lots of moving, ebay sellers, massive spending on large consumption goods, and smaller (or absent) attics and basements in many new homes.  Here is the full story.

Indian Forecast Error

India receives 90% of its rain during monsoon season so forecasting monsoons is critical for productive farming.  Fortunately, according to an article in Nature (subs. req.), the Indian Meteorological Department has found a way to make its forecast better than any other available – they have suppresed publication of the other forecasts.  The Indian government says this is necessary to prevent "confusion."

    The main competitor to the government’s statistical model, which has not reduced its forecast error in 70 years, is from an Institute based in Bangalore which uses a climate model.  The Institute and government forecasts can differ dramatically.  The Institute, for example, forecast that rainfall would be 34% below average in June and 12% below average in July while the government forecast "normal or above normal rains."

The rainfall in June?  35% below average.  No confusion about that.

Thanks to Robin Hanson for the pointer.